in favour of a new
trading corporation, to be founded on a modified basis. Consequently,
a charter (_Real cedula_) was granted on March 10, 1785, to a company,
bearing the style and title of the "_Real Compania de Filipinas_." Its
capital was P8,000,000, in 32,000 shares of P250 each. King Charles
III. took up 4,000 shares; another 3,000 shares were reserved for the
friars and the Manila Spanish or native residents, and the balance
was allotted in the Peninsula.

The defunct company had engaged solely in the American trade, employing
the galleons; its successor left that sphere of commerce and proposed
to trade with the East and Europe.

[117] "To the '_Real Compania de Filipinas_' was conceded the
exclusive privilege of trade between Spain and the Archipelago,
with the exception of the traffic between Manila and Acapulco. Its
ships could fly the Royal Standard, with a signal to distinguish them
from war-vessels. It was allowed two years, counting from the date of
charter, to acquire foreign-built vessels and register them under the
Spanish flag, free of fees. It could import, duty free, any goods for
the fitting out of its ships, or ships' use. It could take into its
service royal naval officers, and, whilst these were so employed,
their seniority would continue to count, and in all respects they
would enjoy the same rights as if they were serving in the navy. It
could engage foreign sailors and officers, always provided that the
captain and chief officer were Spaniards. All existing Royal Decrees
and Orders, forbidding the importation into the Peninsula of stuffs
and manufactured articles from India, China, and Japan were abrogated
in favour of this company. Philippine produce, too, shipped to Spain
by the company, could enter duty free. The prohibition on direct
traffic with China and India was thenceforth abolished in favour of all
Manila merchants, and the company's ships in particular could call at
Chinese ports. The company undertook to support Philippine agriculture,
and to spend, with this object, 4 per cent, of its nett profits."

In order to protect the company's interests, foreign ships were not
allowed to bring goods from Europe to the Philippines, although they
could land Chinese and Indian wares.

By the Treaties of Tordesillas and Antwerp (q.v.), the Spaniards
had agreed that to reach their Oriental possessions they would
take only the Western route, which would be _via_ Mexico or round
Cape Horn.